Abstract
Free riding incentives make it difficult to control climate change. To improve the chances of the Paris Agreement’s ambitious goal, many nations are forming scientific networks in carbon capture and storage (CCS). These networks take many forms (bilateral, hub-and-spoke, and multilateral). Studies of social interactions among scientists demonstrate that research networks are limited because of relational issues, such as lack of trust. This paper provides a rationale for the formation of various types of international CCS networks and examines their impacts on climate change. Our concept of stability focuses on Nash equilibria that are immune to coalitional deviations in overlapping networks. Players may belong to various research networks. A particular research network is a climate club. We show that in the absence of top-down coordination in clubs, the type of global network that forms depends on relational attrition. The complex task is to mitigate free riding while enhancing trust.
Highlights
On 2 November 2021, during the Conference of Parties (COP26) in Glasgow, the prime minister of Canada, Justin Trudeau, pushed the world to commit to a global carbon tax by 2030 that will account for 60% of global greenhouse emissions
Following the bottom-up approach embedded in the Paris Agreement, we initially considered a setting in which there are no income transfers within clubs and research collaboration among club members is not coordinated (i.e., R&D spillovers are not internalized)
Since all nations in the hub-and-spoke arrangement internalize externalities, the common equilibrium payoff for such an arrangement falls less quickly with the attrition rate than the common equilibrium payoff earned by the nations that belong to the isolated bilateral club
Summary
On 2 November 2021, during the Conference of Parties (COP26) in Glasgow, the prime minister of Canada, Justin Trudeau, pushed the world to commit to a global carbon tax by 2030 that will account for 60% of global greenhouse emissions (see https://www.ctvnews. ca/politics/trudeau-takes-carbon-pricing-debate-to-the-global-stage-at-cop26-1.5648007; accessed on 18 October 2021). This finding gives support to the idea that strong ties among research collaborators promote trust and cooperation, and these factors enable these researchers to effectively enhance mutual exchange of highly sensitive and fine-grained information Their result adds to the controversy of which weak or strong ties among researchers are more important for knowledge creation and diffusion. Following the bottom-up approach embedded in the Paris Agreement, we initially considered a setting in which there are no income transfers within clubs and research collaboration among club members is not coordinated (i.e., R&D spillovers are not internalized). In contrast to the situation without transfers, a nation that stands alone in the presence of a bilateral club enjoys an equilibrium payoff that is higher than the common equilibrium payoff earned by the bilateral club members The reason for this is that the benefits from free riding outweigh the benefits produced by R&D sharing.
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